NO B.S. FRIDAY: Newspapers will be dead within the year

Fairfax media (The Age, SMH etc) put themselves up for sale. Two parties were sniffing around, coming to the open inspections, getting their finance sorted. But then come auction day, they just never showed up.

That’s a tad embarrassing for Fairfax, but I don’t think people realise what a huge cultural turning point this is – or that we’re in the middle of right now.

For me, there were some really interesting things about this auction.

First, pretty much everyone agrees that the print media divisions are practically worthless, and pretty much the only thing of value in the whole enterprise is Domain.

Hooray for property. Saving the day again.

If they were trying to sell Domain by itself, they would have done it easy. But add the print papers into the mix, and the deal quickly starts to stink.

And it’s not that the papers are just inconvenient. It’s that right now, they’re a ball and chain around Fairfax’s neck.

Take this sum-of-the-parts valuation from Goldman Sachs.

They figure that at a fair share price of 96c per share, The Metro Media division is worth 2c, while Domain is worth 89c.

That’s nuts right? What kind of business is that?

The Age and the Sydney Morning Herald – all those journo’s and ad space and glossy liftouts – that’s all worth 2% of the total business.

Domain, the real-estate portal, is worth 90%!

It’s not a media empire with an interest in property. Fairfax is a property empire that dabbles in news.

To make matters worse, things are just going from bad to worse for Metro Media. Fairfax project Metro Media revenues to be down a further 12% this year.

Why?

Let me give you a number. $2,988,564.

That was our total marketing spend for the last financial year.

And how much of it went on print advertising?

Precisely zero.

Our marketing budget consistently runs into the millions – it’s one of our key activities – and we just don’t touch print.

Actually, all of it was spent with Facebook. They’re just that effective. And over the past 5 years, Facebook, with no local offices or journalists or anything, has gobbled up most of the Australian marketing spend.

The writing is on the wall for print.

So Fairfax obviously has some problems. But we don’t even know the half of it.

The Fairfax board were being courted by two private equity parties – TPG and H&F. They decided to open up the kimono and give both parties a confidential look at the books.

What happened next?

Well those parties took a look at the books, and said, actually, you know what, I don’t think we’re going to bid.

It’s like a buyer getting a building inspection before auction and deciding not to bother showing up.

It’s suggests that things inside the business are actually much worse than they seem. (And they don’t seem that great.)

There’s no good news here for Fairfax. Seriously, it’s looking dead in the water. I wouldn’t be surprised if The Age was off the shelves by the end of the year.

But this is huge right? I’ve grown up with The Age. I haven’t always loved it, but I did think that it would always be there.

It’s hard to imagine it disappearing from the cultural landscape.

That’s what I mean there’s some huge changes underway.

And this isn’t just a Fairfax story.

Over at Murdoch, they’re jettisoning any illusions to impartiality, and bringing back the “Australia needs Tony” propaganda.

Light on detail, heavy on scare-mongering, The Telegraph has been condemned for ‘taking sides’, and Rupert is being attacked for trying to shape Australia to his liking.

But this misses the point.

This isn’t propaganda. This isn’t what Rupert wants. This is what sells with Telegraph readers.

Over the last few years, print media have been forced to find their niche. People didn’t want balanced news. They wanted stuff that confirmed the stuff they already believed. If the papers weren’t going to give it to them, then there were niche, online publications that would.

And so you saw the media landscape split up almost exactly along party lines. Rupert went centre right and the Coalition. Fairfax went centre left and Labor. The Guardian went far left into the Territory where the Greens were hanging out. So far we haven’t seen anything set up in the far right where One Nation is, but there’s a business opportunity there.

Print media figured out what their niche wanted, and served it up.

The thing is though, no niche is big enough for a broadsheet.

This is the custom economy. This is an age where my iphone can be practically any colour I want it to be. I expect everything I touch to be finely calibrated to my own personal tastes. That’s just how the economy works now.

But media hasn’t caught up. They are still “broad”casting, even though people want the media they consume to be exactly what they expect and want.

Mass publications just aren’t nimble enough to do this.

Last weekend, we saw Fairfax’s last gasp. The last hand in the air before she sinks below the surface.

She was waving, but no one came to save her.

So now she’ll take care of the messy business herself. Fairfax will sell off Domain and close down print. The Murdoch press will follow soon.

This isn’t just about a revolution in business models. This is a revolution in the way we engage with the world. This is about the way receive information, and the customised, algorithmically-personalised, narrow-casting that we now expect.
And what does politics look like in this brand new world?

Well, the major parties are facing the exact same problem as the papers. People want the parties to represent their interests exactly. Fringe parties are popping up all over the place because broad-base political parties aren’t nimble enough to meet everyone’s needs.

And the fact they will soon no longer have the tools to broadcast popular messaging doesn’t help.

Comments

its mind boggling to ‘say the least’. imagine a world without ‘newspapers’. (fake news?) also how many political parties will there be? is it the end of democracy as we know it?

as far as i am aware everybody has different ideas, so we might even descend into the world of ‘babel’. you go to the internet and pick up 45 different outlets all saying something different about ‘news’! 🙂 which one does one believe?

at the moment we have a ‘world news’ coverage by murdoch, so everyone is ‘in tune’ so to speak and any newspaper outlet outside the murdoch regime is considered inflammatory or just plain dumb. so maybe there is much merit in the demise of the ‘big’ newspapers.

fairfax..well the dinosaurs met their doom, so i suppose that fairfax will die a slow painful death. and what of our wonderful ‘no news’ west australian newspaper? is it nothing more than a a very poor filter for the wider range of newspapers in the ‘east’?

no more letters to the editor to read. no more comics, crossword puzzles etc. etc. well maybe that will be their saviour!! people like to read ‘letters to the editor’ and do crossword puzzles and read comics:-) i know that i do.

every day brings more stuff. and the latest ‘news’ (based on financial facts) is the ‘carmageddon’. its to do with the state of the u.s. car market. its a biggy. and it WILL affect everyone everywhere. massive debts about to sink the u.s.a. economy. and you know how much we are tied to america. its like a bloody umbilical cord!

will nathan buckley keep his job at victoria park? the committee are right behind him to the man, with the knife:-) now that IS real news!

Newspapers will go the way of other ‘traditional’ industries. Only niche publications will survive and they will be on the web. I gave up reading newspapers and TV news years ago. Little of their content affects me or interests me. If there is something that affects me then I will hear about it and check it out on the web. The only exception I make is when travelling overseas, as it gives an insight into local issues and culture.

Many industries have already fallen as a result of new technology and the Internet. Remember Kodak? What about taxis, B&B, banking; even real estate is now mostly online. It won’t be so long before you won’t be allowed to drive your own car. Soon many shops will be boarded up as they will have been replaced by warehouses and delivery vans. Shops have already clustered together in malls hoping they will be saved from their demise.

These changes are disruptive and difficult to predict.
There are two worrying things about these changes, one of which you have raised Jon: politics. Western democracy works best with few dominant parties and a strong leader (no comment!). A number of small parties with narrowly-defined objectives just doesn’t work. Italy has had this situation for years and see the political mess they are often in!

The other worrying thing is – what will all those people who are currently working in industries that will disappear. This is the big question that governments do not want to face, let alone work out a solution.

Newspapers will only survive if they diversify into embossed toilet tissue products. Read the fact or fake news article, then wipe & flush. The quality of Sorbent is disappointing. Enough of puppy pictures, please.
Maybe the only saving grace will be the weekend edition with a glossy mag insert & traditional classifieds.
The local rag that gets delivered free to our letterbox has more relevant content than the metro papers.

Newsletter

Join over 217,477 Wealth Seekers and Get No B.S. Timely and Valuable Education On The Latest Trends An Opportunities To Make Money Today.